As the property market sits on the cusp of its biggest and longest selling season of the year, the Republic's mortgage providers are also gearing up for the period that will provide the majority of their new business for 2004.
Anybody preparing to begin a house hunt over the next few weeks will find themselves bombarded with financial information from almost all quarters. As always, the best way to combat this over-supply of detail is to gain information in advance - to try and to second guess this year's property finance market before it wins the battle. What exactly can we expect mortgage providers to throw at us in 2004?
• Competition is sure to increase in the mortgage market, no matter how well-ensconced the existing players appear to be. The first shot in this everlasting fight for market share has already been delivered, with First Active on the point of launching a new tracker mortgage (where the interest rate is inextricably linked to movements in the European Central Bank's interest rates) that stands in direct competition to that of its stablemate, Ulster Bank. Merrion Stockbrokers is predicting that the overall mortgage market will grow by 13 per cent this year, but the apportionment of that growth is sure to be the basis for a great fight. This will all be positive for consumers, who should gain more than ever from shopping around.
• On a related subject, the tracker mortgage is set to be the stellar product of 2004. Aside from First Active, Permanent TSB is also preparing to launch a tracker that will join a market already occupied by Ulster Bank, National Irish Bank and AIB. Mortgage broker Mr Liam Ferguson of Ferguson & Associates says he is curious to see how the new First Active and Permanent TSB offerings will apply to existing customers who wish to move to a tracker from an older product. He predicts that, as news of trackers' benefits spreads by word of mouth, it will become difficult for the lenders to avoid offering the new rates to customers already on their books.
• Switching is also set to be big news this year, with the business of moving a loan to another lender offering a cheaper interest rate becoming more affordable all the time. Ulster Bank said recently that people could move to its loans from another lender at a notably low cost (just 0.1 per cent of the loan in many cases) and, interestingly, at high speed. Mr Ferguson believes that other lenders will copy Ulster Bank's idea as the year progresses. His brokerage has decided to pay Ulster's switching fee for customers wishing to change, and he expects more brokers to follow suit.
• Another sea change hitting the mortgage market this year is the Irish Financial Services Regulatory Authority's new Interim Code of Practice for Mortgage Intermediaries, which came into effect a couple of weeks ago in advance of a more permanent code. The new measures mean that brokers must tell clients exactly how much commission they are being paid by mortgage providers when arranging a particular mortgage. For some mortgage brokers, this will make little difference, since they can already be trusted to offer their clients the best product for their needs rather than simply choosing the provider that pays most commission. Other less scrupulous brokers may need to change their practices however, particularly since the full code is likely to require brokers to provide sound and full justification for all their mortgage recommendations.
• Finally we have interest rates. Like many brokers, Mr Ferguson has little time for interest rate predictions - he believes that no analyst truly knows what will happen and therefore argues that a one or other prediction should never be accepted. "Make your decisions when buying a mortgage or other loan product on the assumption that rates will rise by multiple percentage points. Ask to see the repayments if they do. See if you could afford them, but don't believe it's a certainty that rates will rise this quarter or any other quarter. No one knows."
